Final pay and processing leavers in Ireland
Reviewed by Mellow Editorial Team, HR & payroll content team
When an employee leaves your organisation, their final pay must include all outstanding wages, accrued but untaken annual leave, and any contractual payments — all processed through a real-time payroll submission to Revenue on or before the final payday.
What goes into final pay
Final pay is not simply the last week or month of salary. You need to calculate and include several elements.
Outstanding basic pay. Pay the employee for all days worked up to and including their last day, pro-rated if they leave mid-period.
Accrued but untaken annual leave. Under the Organisation of Working Time Act, employees are entitled to 4 working weeks of statutory annual leave per year. If an employee has accrued leave they have not taken by their leaving date, you must pay this out. Calculate it based on their normal weekly pay. If they have taken more leave than they have accrued for the year, you can deduct the excess — but only if the contract of employment expressly permits this.
Notice pay. If the employee works their notice, you pay them as normal. If you pay in lieu of notice (PILON), this is treated as taxable pay. Check the contract to confirm the notice entitlement.
Any other contractual payments. Bonuses, commission or other payments that have been earned but not yet paid belong to the employee and must be included.
Redundancy pay. Statutory redundancy is paid at a rate set by the Redundancy Payments Acts and is exempt from income tax up to certain thresholds. If the departure involves redundancy, the calculation sits outside standard payroll — but the payment still runs through your payroll system and must be reported correctly.
Tax and deductions on final pay
Final pay is taxed the same way as any other payroll run. Income tax applies at 20% on earnings within the standard rate band (roughly €44,000 for a single person) and 40% above that. USC deductions continue on a banded basis: 0.5%, 2%, 3% and 8% depending on income level. Employee PRSI at 4.1% and employer PRSI at 11.15% (Class A) also apply to the final payment as normal.
One point that catches employers out: if the employee has not fully used their tax credits or rate band during the year, Revenue's cumulative basis means they may actually owe less tax on their final payslip than usual. Conversely, if you are operating emergency tax because the employee never submitted a tax credit certificate, ensure you regularise this on the final payroll run where possible.
If any payment is made after the employee has left — for example, a bonus that crystallises later — you must still run a payroll submission and apply the correct deductions. Paying outside payroll is not an option.
Real-time reporting requirements
Ireland operates real-time payroll reporting. You must submit a payroll submission (PSR) to Revenue via ROS on or before the date you make the final payment. There is no separate "leaver" notification form — the system knows the employee is leaving based on how you handle their record.
After the final pay run, update the employee's status in your payroll software to mark them as a leaver. Their cumulative pay and tax figures for the year remain on record, which Revenue and the employee can access. The employee can view their figures through myAccount on Revenue's website, and this information feeds automatically into their end-of-year review.
If the leaving date falls mid-month and you use monthly payroll, still submit on or before payment — do not wait until the normal payroll date if you pay out earlier.
The P45 — or rather, the lack of one
Since PAYE Modernisation came into effect, Ireland no longer issues P45 forms. The old process — handing a paper P45 to the employee to give to their next employer — is gone. Revenue holds all the pay and tax information centrally. The employee's new employer simply requests their tax credits and cut-off point from Revenue directly, and Revenue issues an updated tax credit certificate.
You are not required to give the employee a P45, but it is good practice to provide a payslip or written summary showing their final gross pay, tax deducted, USC, PRSI and the pay period it covers. This helps the employee if they are querying their record or claiming a refund from Revenue after they leave.
Common mistakes to avoid
Forgetting accrued leave is the most frequent error — particularly for employees who have been on sick leave or who leave partway through the leave year. Keep records of leave taken throughout the year so the final calculation is straightforward.
Delaying the payroll submission is another common issue. Revenue expects the PSR on or before payment, not after. A late submission can trigger a compliance notice.
Finally, do not overlook pension contributions. If the employee is enrolled in a workplace pension scheme, contributions for the final pay period must be remitted to the pension provider as normal, with the same deadline as any other period.
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